cost plays an important in construction management .

1. By
D.SARAVANAMURTHY
M.E 1ST YEAR

2.  Construction Project Management (CM) is a
professional service that uses specialized, project
management techniques to oversee the planning,
design, and construction of a project, from its
beginning to its end. The purpose of CM is to
control a project's time, cost and quality.

3.  Large construction projects are inherently
complex and dynamic.
 However, most of them do not achieve much
success.
 A properly defined and managed scope leads
to delivering quality project in agreed cost
and within specified schedules to the stake-
holders.

4.  In many construction projects project
managers and contractors find difficulties like
poor planning of project, poor material,
labour shortages, increased cost of material,
delays in deliveries, wastage of material, over
budgeting, unexpected weather changes,
lapse in management and control, loss of
material, poor communication etc.
 This results into cost and time overruns,
conflicts in project.

5.  Due to cost reduction techniques
cost of project is managed
so that contractor does not
suffer losses while carrying
different activities of projects.

6.  Fixed Costs:-
Fixed costs are those that do not change
throughout the life-cycle of a project. For
example, if construction of road is there, the
excavators and bulldozers are fixed costs. For
software development projects, the physical
development space and development
computers are fixed costs to the project.

7.  Direct Costs :-
Direct costs are expenses that come out
of the project budget directly. For example, if
outsourc ing some of the development work,
the developers are expected to put in a
specific amount of time, which is then billed
for. The developer salaries are direct costs.
 Sunk Costs :-
Sunk costs are those that have been
incurred in a project, but have not produced
value towards the project’s objectives.

8.  1) Similar Construction Projects:
For the construction estimate, the best
reference will be similar construction
projects. The final cost of those similar
projects can give the idea for the new
construction project cost calculation. The
final cost of past project needs to be factored
with current construction cost indices.

9. Construction Material Costs:
Construction material cost consists of
material cost, shipping charges and taxes
applicable if any. So, it is important consider
all these variations while calculating
construction material cost.
Labor Wage Rates:
Labor wages varies place to place. So,
local wage rate should be considered in
calculation. If the project has to be started
after several months of estimating the project
cost, the probable variation in wage rates has
to be considered in the calculation.

10.  Construction Site Conditions:
Project site conditions can increase
construction costs. Site conditions such as
poor soil conditions, wetlands, contaminated
materials, conflicting utilities environmentally
sensitivity area, ground water, river or stream
crossings, heavy traffic, buried storage tanks,
archaeological sites, endangered species
habitat and similar existing conditions etc.
can increase the project cost during
construction phase if these variations are not
considered during estimation.

11.  Inflation Factor:
A construction project can continue for
years before completion. During the
construction period, the cost of materials,
tools, labors, equipments etc. may vary from
time to time. This variation in the prices
should be considered during cost estimation
process.
Project Schedule:
Duration of construction project is affects
the cost.

12.  Increase in project duration can increase the
construction project cost due to increase in
indirect costs, while reduction in construction
cost also increases the project cost due to
increase in direct costs.
 Therefore, construction project schedules
also need to be considered during project
cost estimation.
Reputation of Engineer:
If a contractor is comfortable working with
a particular engineer, or engineering firm, the
project runs smoother and therefore is more
cost-effective

13.  Size and Type of Construction Project:
For a large construction project, there can
be high demand for workforce. For such a
requirements, local workmen may not be
sufficient and workmen from different
regions need be called. These may incur extra
costs such projects and also for the type of
construction project where specialized
workforce is required.

14.  Location of Construction:
When a location of construction project is
far away from available resources, it increases
the project cost. Cost of transportation for
workmen, equipments, materials, tools etc.
increases with distance and adds to the
project cost.

15.  There are various cost effective techniques of
construction. Lots of them are also energy
efficient and easily adoptable.
 Since India is a developing country, the
economy haves importance There is a need
for the adoption of strong, durable,
environment friendly, ecologically
appropriate, energy efficient and yet cost
effective materials and appropriate
technologies in construction.

16. In construction project reduction in cost
can be achieved by some of the following
techniques:
a) Value Engineering
b) Material Management
c) Budgetary Control
d) Cost optimization Techniques
e) Cost Reduction Techniques at site

17.  Value Engineering:
Value engineering is a systematic
application of recognized techniques which
identify the functions of the product or
service, establish the worth of those
functions, and provide the necessary
functions to meet the required performance
at the lowest overall cost.

18.  Application of Value Engineering(VE) to
construction projects is a solution which
emphasis the function of project which helps
to team to make final choice and which
results in cost effective design for project.
Material Management:
 To manage productivity and cost efficiency
material management is essential.
 It contributes the major portion of expenses
in construction projects.

19.  Controlling procurement, carrying cost can
reduce total project cost and complete the
project in a fast track method. ABC (Always
Better Control) is the tool to identify those
material.
 By resource leveling, smoothing usage can be
brought to optimum refined level so that
much storage cost can be eliminated.
Economic Order Quantity (EOQ) is arrived,
then sensitivity of material is checked using
what –if analysis. Then effect of project is
checked to find optimum solution. This
optimizes total project cost.

20.  Budgetary Control:
 For cost control on a project, the construction
plan and the associated cash flow estimates
can provide the baseline reference for
subsequent project monitoring and control.
 For schedules, progress on individual
activities and the achievement of milestone
completions can be compared with the
project schedule to monitor the progress of
activities

21.  Overruns in particular cost categories signal
the possibility of problems and give an
indication of exactly what problems are being
encountered.
 The PERT and CPM techniques bar chart,
Gantt chart relate to time and shows how to
accelerate the project for the lowest possible
cost.

22.  Cost Reduction Techniques at site:
 Contractor uses schedule to monitor the
progress of the work which is related to cost.
Inspection of work is done and comparison
with budget is made.
 Meetings held to review the progress of work
provides motivation to all workers and stake
holders to improve their performance.

23.  Documentation of all activities or record
keeping is important to enable detection of
deviation from the set standards.
 Quantification of work, and comparing cost
with bill quantities helps to evaluate the work
and to check the progress of work.

24.  It was discussed that using cost reduction
techniques by multidisciplinary team, value
and economy are improved through study of
alternative design concepts, material and
construction methods without compromising
functional requirement and quality.
 Cost effective construction techniques,
material and different management strategies
during the execution of project plays
important role in saving time as well as cost
of construction.

25.  Thus, cost reduction techniques assures best
cost, value will be obtained over life cycle of
the building or structure.